DEAR SENATOR: WHY YOU SHOULD VOTE AGAINST CAP-AND-TRADE

October 1, 2009

Earlier this year the U.S House of Representatives approved the Waxman-Markey bill to establish a so-called cap-and-trade program designed to reduce U.S. carbon dioxide emissions. Under a cap-and-trade plan, the government would establish a total limit for annual CO2 emissions, auction or otherwise distribute ration coupons for the right to emit, and then allow the holders to buy and sell coupons in a legal secondary market. This would impose costs on the economy, but the theory of the case is that the reduction in climate change damages would more than offset this. The Senate is considering a vote on similar legislation this fall.

Without regard to party or ideology, the evidence is clear that such a law, if it is anything like Waxman-Markey, would be contrary to the public interest, says James Manzi, a senior fellow with the Manhattan Institute:

For one thing, it would be a terrible deal for American taxpayers; according to the Environmental Protection Agency's own projections, Waxman-Markey would impose annual costs of about $1,100 per household (a little less than 1 percent of total consumption) by 2050.

If the law works precisely as intended, in about 100 years we should expect surface temperatures to be a about one-tenth of one degree Celsius lower than they otherwise would be.

The expected costs are at least 10 times the expected benefits, even using the EPA's cost estimates and assuming achievement of the primary goal of the legislation.

There are other reasons to be wary of Waxman-Markey as well, says Manzi:

Contrary to early expectations that auctioning cap-and-trade permits would generate $80 billion per year of government revenue, it would not contribute materially to deficit reduction.

Because so many allowances have been given away to special interests to try to get the votes needed to pass the House bill, the Congressional Budget Office now estimates that it will bring in a net of a little over $2 billion per year over the next decade; this is about one one-thousandth of this year's budget deficit.

As Capitol Hill prepares to take up climate change legislation once again, senators should cast a far more critical eye at the chief cap-and-trade proposal than their House counterparts did in June. Waxman-Markey would impose costs at least 10 times as large as its benefits, would not reduce the deficit, and wouldn't even really cap emissions. What, then, is the point, asks Manzi?

Source: James Manzi, "Dear Senator: Why you should vote against cap-and-trade," Washington Examiner, September 30, 2009.